Diocese contributes to employee 401(k) plans

By KATIE LEFEBVRE, Globe staff reporter
Oct. 25, 2007

One of the many benefits employees receive when working for the Diocese of Sioux City is a 401(k) plan (retirement plan).

"We are somewhat unique in employers out there. In order for our company, our locations, our schools and parishes to contribute to those individual accounts we put in five percent of the employee's gross salary whether or not they put anything in," said Margaret Fuentes, director of human resources for the Diocese of Sioux City.

At most companies, the company usually contributes a match of what the employee puts in. For example, the employee could put in three percent and the employer might match that with two percent.

"This is considered a 401(k) plan and that name resonates out there with employees," said Dan Berger, a registered representative for Principal Financial Group, who works with the diocese and its employees. "They are the predominate form of employer based retirement plans and have been going on for 10 years now."

Also at other companies there might be a waiting period, possibly six months to a year, before the retirement plan would start. For employees of the Diocese of Sioux City, the plan starts right away.

"Eligibility here is immediate," said Berger. "Employees can contribute through payroll deduction on a pre-tax basis. This year they can put up to $15,500 in the 401(k). The government has allowed people to put a lot of money in these because they are trying to encourage employees to contribute towards their retirement."

Now that the diocese has this option for its employees, more and more people have decided to participate.

"Before we had the opportunity to do this on a pre-tax basis, I think we had seven people, not seven percent, that contributed because it was after taxes," said Fuentes. "Now over 50 percent of our people contribute. I think it is fabulous."

She added that as soon as the diocese was able to provide a 401(k) plan, about 10 years ago, they moved to it within six months.

"We thought it was so beneficial for people to be able to put money aside themselves for their retirement plan," said Fuentes.

Berger explained that in 1997 the tax law changed to allow non-profit organizations to have 401(k) plans.

"It was in 1991 that the bishop mandated that all entities in the diocese would have a retirement plan for their employees," he said. "Most of them participate through this plan. We didn't have to sell the concept because 401(k) was a familiar term. Over time participation has increased."

Principal Financial Group goes out to the schools and parishes to do in-services and employee education about 401(k) plans. They also offer one-on-one consultations with the employees.

"Dan has gone out and made himself available to most of our employee groups, certainly the larger ones, on a recurring basis. He helps people look at their account and rebalance it based on an approaching retirement, a change in their family or a change in employment in the family," said Fuentes. "He really has set down and done that with people. He brings his computer so they can see their account live and make the changes then and there."

Berger said that the willingness of the people in the diocese that are involved - administrators, principals, etc. - allows Principal to do their job. Some of the employers make sure their employees meet with Berger to discuss their plan.

"There are many complicated factors so if we can help employees realize what they have and how to capitalize on it, that is really where we need to be," said Fuentes.

According to Berger, many employers provide a retirement plan because they have to and don't give the employees time to really learn about it.

"That is not as rewarding of an experience for a lot of employees. You can't do this stuff without a good working relationship and partnership and an openness," he said.

At a recent update meeting, the diocese was presented with an award for 25 years of partnership with Principal Financial Group. The meetings are a way for the diocese to find out how the investments are doing.

"What we like to look at is really the partnership that we have enjoyed for 25 years as a customer of Principal Financial Group," said Berger. "It simply recognizes that 25-year relationship."

Fuentes said she was "very surprised and very honored" to receive the award for the diocese.

Berger has been working with the diocese since the partnership began with Principal 25 years ago.

"He really looks out for our people and our locations in terms of what the greatest benefit is," said Fuentes. "That is hard to find."

She mentioned that she and a few others from the diocese meet with Dan and Principal Financial service people in Des Moines about every six months.

"We look at how all of the accounts are doing - are they yielding where they should be? How do they compare to their peers in the investment world?" said Fuentes. "We want to be able to continue to provide the best platform we can for people to invest in. We look at that and have made changes based on that sometimes."